(Solved): I ONLY NEED E-G. I HAVE ATTACHED THE ANSWERS TO A-D BELOW. PLEASE ONLY DO E-G (e) What is the per-un ...

I ONLY NEED E-G. I HAVE ATTACHED THE ANSWERS TO A-D BELOW. PLEASE ONLY DO E-G

(e) What is the per-unit cost of the externality?

(f) Without intervention, would the firm's total revenue at the socially optimal quantity be higher or lower than its total revenue at market equilibrium? Explain.

(g) What type of government intervention could achieve allocative efficiency in this market? Explain.

 

The market for Easily-Obtainedeum is perfectly competitive. However, its marginal social benefits exceed its marginal private benefits.

(a) Graph the market for Easily-Obtainedeum, labeling the marginal private benefit (MPB), marginal social benefit (MSB), marginal private cost (MPC), and marginal social cost (MSC).

(b) What type of market failure does Easily-Obtainedeum suffer from? Explain.

(c) Shade the deadweight loss, if any.

(d) The intersection of the MSC and the MSB occurs at a price of $50 and a quantity of 2,000 units. The MPB curve intersects 2,000 units at $10. The market without government intervention clears at $30 and 1,000 units. The MSB curve intersects 1,000 units at $70. Calculate the deadweight loss of this market failure.

a) 1 P2 MPC = MSC = 5 • Deadweight loss MSB (Marginal Social benefit) Price PA 1 1 1 1 MPB =D (Marginal private benefit) Quantity > Under es production b) ) Easily - Obtain edan graph Type of market failure a positive consumption externality Additionally, there goods under consumption. The is right to the MP B curve a benefit is generated to non-market participants Private Consumption. is an MSB curve aus by each unit of () The deadweight loss shaded in the graph is the area = OPQ (d) Murfect failure of this dead weight loss, - $20,000 .X 40x1000